Bonds Still Struggling. 10yr Staging For a Bigger Move?
After holding ground admirably overnight despite the pull of weaker bond market in Europe, Treasuries and MBS lost ground in the first few hours. By 9:40am, we'd seen the weakest levels of the day and everything was exceptionally sideways after that. Damage was minimal in the big picture (10yr yield up less than 2bps by the 3pm close and MBS down just over an eighth of a point), but the concern is that bonds could be staging for a bigger move depending on the outcome of tomorrow's data and 10yr Treasury auction.
Fed MBS Buying 10am, 1130am, 1pm
Stronger in Asia, but European yield spike pulled US yields higher. Stock selling mitigated some of the damage. Now just barely weaker in the first domestic hour with 10s less than 1bp higher and MBS down only 1 tick (0.03). No significant data or news so far.
additional weakness starting around 9:30 on a mini-glut of corporate bond deals. 10yr up 2bps and MBS down 6 ticks (.19).
More or less perfectly flat since 10am with 10yr yields hugging the 1.62% technical level and MBS remaining in 5-6 ticks (.16-.19) weaker on the day. 3yr Treasury auction was a non-event. Same story for numerous Fed speakers.